June 13 (Bloomberg) -- Offshore wind developers in the U.K.
will be able to meet a state target of lowering power costs 30
percent in 2020 by forming industry alliances, according to a
group backed by companies including Alstom SA and Siemens AG.

A U.K. plan to cut costs to 100 pounds ($155) a megawatt-hour by 2020 from 140 pounds is achievable, the Offshore Wind
Cost Reduction Task Force, also including Vestas Wind Energy
Systems A/S and Gamesa Corporacion Tecnologica SA, said today.

That could save more than 3 billion pounds a year, wind
power trade lobby RenewableUK and the U.K.’s Department of
Energy and Climate Change said in a joint statement.

“It’s essential that industry recognizes and acts on the
need to bear down costs to provide long term protection to
consumers from volatile fossil fuel prices,” Energy Minister
Charles Hendry said today at a conference.

Prime Minister David Cameron set up the taskforce in 2011
to help make offshore wind competitive with energy like nuclear
power and curb household bills. The U.K. plans 18 gigawatts of
offshore turbines by 2020 from about 1.9 gigawatts currently.

Developers and equipment suppliers should use “more
efficient contracting” to cut the cost and risk of installing
turbines, the taskforce said. The approach borrows from the
experience of North Sea oil and gas companies that shared
expertise to cut capital costs as oil prices fell in the 1980s.

The group also recommended creating a body with government
and industry members to address possible bottlenecks and delays.

Tough Timeline

“The timeline is tough so the taskforce must now work on
implementing the ideas in their report,” Benj Sykes, director
of U.K. wind operations at Dong Energy A/S, said in a statement.

The “lion’s share” of early investment will come from
foreign companies that may manufacture in the U.K., Hendry said.

Britain in January 2010 awarded licenses for 32 gigawatts
of generation in its third round of offshore wind tenders, with
plans to begin installations in about 2015. The Centre for
Economics and Business Research said in a report commissioned by
Irish wind developer Mainstream Renewable Power Ltd. that
“aggressive” development may create 215,000 jobs by 2030.

The use of larger, more efficient wind turbines may reduce
costs, said the Crown Estate, which manages the U.K.’s seabed.

The estate said today in a report that greater competition
among suppliers and improvements in technology may also help
spur a 39 percent drop in electricity costs by 2020. Vestas and
Siemens are developing 6 or 7-megawatt turbines for use at sea.

Deal structures for offshore projects should be simplified,
and credit ratings agencies and insurers engaged to increase
confidence in the industry, according to the taskforce.